American consumers opened their wallets for back-to-school shopping in August, boosting retail sales as gas prices fell and the job market improved.
U.S. retail sales jumped 0.6 percent last month from the month before, the Commerce Department said Friday. July sales were also revised to a gain of 0.3 percent, up from a previous estimate that spending was flat.
“Consumers came back with a vengeance in August,” said Chris Christopher, an economist at IHS Global Insight. “Retail sales were driven by a strong need to buy automobiles, falling pump prices, rising consumer confidence and stronger than expected back-to-school sales.”
The healthy showing dispelled worries that consumers were taking a break from spending during the summer, analysts said.
Stripping away motor vehicle and parts receipts, retail sales increased by 0.3 percent. Total retail sales were up 5 percent from August 2013, the biggest growth in more than a year.
Retail sales are considered a bellwether of consumer spending, which makes up two-thirds of U.S. economic activity. August sales were in line with other indicators showing economic growth. Consumer confidence hit a 14-month high in early September, according to the Thomson Reuters/University of Michigan index. And initial unemployment claims have been averaging about 30,000 a week, a sign of a healthy job market.
Several sectors showed gains in August.
Back-to-school shopping pushed up clothing and accessories by 0.3 percent. Furniture sales rose 0.7 percent, and building materials and supplies dealers reported a 1 percent increase.
Lindsey Piegza, chief economist at Sterne Agee, said falling gas prices put extra money in people’s pockets, which increased their spending. But sustained retail sales growth will come when incomes rise, she said.
“Continued price reprieve at the pump will help maintain a modest but positive spending pace in the third quarter, despite minimal improvement in wage growth,” she said in a Friday note. But “in order to see a marked increase in spending … consumers will need sustained, robust income gains.”
